News and Insights on Connecticut Real Estate Law


Wednesday, April 2, 2008

Proposed Act Concerning Environmental Disclosures

For many years, the law in Connecticut on disclosures in real estate transactions was “caveat emptor,” Latin for “buyer beware.” A seller of real estate, whether residential, commercial or both, had no obligation to disclose an aspects of the condition of the property. A seller could be liable for making a misrepresentation regarding the condition of the property, and courts often stretched to find misrepresentations in order to protect innocent buyers. One example is the multiple listing service. Courts have routinely held that the information in this service constitutes a representation as to the condition of the property. The Connecticut legislature finally obliterated “buyer beware,” at least in residential closings, by adopting legislation requiring that each seller deliver something called a Residential Property Condition Disclosure Report. This is a multiple page document which requires the seller to disclose many aspects of the condition of the property. If the seller doesn’t deliver the report, the seller must credit the buyer $300 at closing. Although the report is not intended to be a warranty of the condition of the property, if the seller fails to disclose anything the seller faces liability for non-disclosure.
Now the Connecticut legislature is taking disclosure obligations to a new level. A bill now making the rounds would require any seller of residential property to disclose to the buyer if the property is located within 300 feet of an “environmentally hazardous site.” There are eight different categories of environmentally hazardous sites, including proposed superfund sites. This would put a tremendous burden on any seller. What seller, real estate broker or even lawyer would know how to find this out? And how do you measure the distance without having a survey done? Do you get out there with a tape measure? 
If the seller’s property is within 300 feet of an environmentally hazardous site and the seller follows the letter of the law and delivers the required disclosure, the buyer can then terminate the contract within seven business days after receiving the disclosure. This could have a tremendous adverse effect on the seller, because the seller might have already signed a contract to buy a new home. If the sale of his or her existing house falls through, the seller in most cases is not going to be able to close on the new property and may forfeit his or her deposit.
The Real Property Section of the Connecticut Bar Association recently voted to oppose this legislation. Let’s hope our legislature realizes it causes more problems than it creates and focuses on more pressing matters.

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